Online Conversion Rates

Part Eight - Guide to Increasing Online Sales

Before I go on I want to throw a few facts at you. You might think that I am poring cold water on your plans to develop a successful online business, but I'm not. Do you know that the average conversion rate for online purchases is about 2%? This means that for every 100 visitors a commercial website receives they can expect two of them to make a purchase.

An offline retailer on the other hand usually enjoys a conversion rate of about 50%, meaning that on any given day about half of the people that walk into a shop will make a purchase.

You might be second guessing the wisdom of trying to sell anything online after reading those numbers. The reality is that an offline commercial business must struggle to bring customers to a shop, the cost of promoting a strictly offline business can be quite high and a pretty hefty price can be attached to acquiring each of those customers. In other words, while an offline retailer enjoys a higher conversion rate than an online one, an offline retailer has a much smaller potential customer base to deal with and the cost of attracting customers is much higher.

So while the average conversion rate for online retailers may seem low we have to remember that the audience or the pool of potential customers is much, much higher than it is in the offline world.

Here's a quick example: An offline sunglass shop that receives 50 visitors to a store each day can be expected to make 25 sales per day, on average.

An established online sunglass shop on the other hand, one which has been optimized for search engines and has addressed the issues outlined in this document, can expect 2 or 3 thousand visitors per day and may even enjoy a conversion rate of 5% or more. Or 100 to 150 sales per day.

Don't forget that the cost of acquiring those sales is much higher for an offline retailer as well. Depending on the business and the advertising channels used, those customers may be costing anywhere between $20 and $70 each to acquire, much more if we include television ads into the mix as an advertising channel.

An online retailer on the other hand might have customer acquisition costs around the $5 to $8 mark. Which translates to lower sales related expenses and more profit. So, don't be put off by the lower conversion rates of online sales. In fact, focus on the advantages and focus on finding ways to increase conversion rates without drastically increasing your expenses. It can be done.


Part One - Introduction to Online Sales
Part Two - Web Site Usability
Part Three - Defining Calls to Action
Part Four - Optimizing Sales Copy
Part Five - Online Purchasing Behaviors
Part Six - Price Comparison Behavior
Part Seven - Building Online Trust
Part Eight - Understanding Conversion Rates
Part Nine - The Payment Process
Part Ten - After The Sale

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